Understanding REDD Implications for lao PDR, Nepal and Vietnam

Understanding REDD Implications for lao PDR, Nepal and Vietnam Written by: Commissioned by SNV April 2009 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam About us SNV Netherlands Development Organisation is a Netherlands based international NGO that delivers capacity development advisory services to over 2,000 clients in 32 countries in Africa, Asia, Latin America and the Balkans In Asia, SNV provides capacity development services to government, non-government and private sector organisations in Nepal, Vietnam, Bhutan, Lao PDR, Cambodia, Bangladesh, Pakistan and Indonesia Our 140 advisers in Asia work with local capacity builders and local actors, primarily those who operate at national and meso levels, in strengthening their capacity to effectively realise poverty reduction and good governance SNV aims to achieve development results in two areas: (1) R  educing extreme poverty by increasing production, employment and equitable income opportunities via our work in three sectors: Smallholder Cash Crops, Pro-poor Sustainable Tourism, Forest Products, and (2) I mproving the access, coverage and quality of basic services via our work in two sectors: Water, Sanitation & Hygiene, and Renewable Energy ICC IndoChina Carbon was established in 2008 with the aim of promoting cleaner development and forest conservation across the region by tapping into finance from carbon markets The company’s founders bring over 25 years of experience designing, negotiating and managing projects in the region Our main activities include: (i) offset projects; (ii) corporate strategies; (iii) climate solutions With our experience in the forestry sector, the issue of reduced emissions from deforestation and degradation (REDD) has become a growing focus for the company ICC is a project developer of REDD projects and a provider of advisory services on REDD For further information: SNV Asia IndoChina Carbon (ICC) Rob Ukkerman Richard McNally / Nathan Sage Regional Network Leader Forest Products info@indochinacarbon.com 218 Doi Can, Hanoi, Vietnam Tel: +84 3846 3791 Fax: +84 3846 3794 rukkerman@snvworld.org www.snvworld.org/Asia The content, findings, interpretations and conclusions of the papers in this publication are solely the views of the authors and not necessarily reflect those of SNV or other organisations participating in this publication The material presented in this publication does not imply the endorsement or the expression of any opinion about the legal status of any country, territory, administration or authority, or the delimitation of its frontier or boundaries by SNV or other organisations that have participated in the preparation of this publication Copyright 2009 @ SNV Netherlands Development Organisation and Indochina Carbon Design, layout, editing & printing: Que Nguyen & TEAM Creative., JSC Photos by SNV advisors We would like to thank many people who contributed to this publication Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Table of contents Abbreviations Preface Executive summary Introduction Chapter 1: Design of a Future International REDD Mechanism 11 1.1 Background 11 1.2 Design Issues in Interenational REDD Proposals 12 1.3 Project Level REDD: The Nested Approach 17 Chapter 2: REDD Initiatives 19 20 Noel Kempff Mercado Climate Action Project, Bolivia 2 T  he Pilot Program to Protect the Brazilian Rain Forest and Amazonian Protected Areas Program, Brazil 25 C  ongo Forest Partnership and Commission of Forest Ministers of Central African 29 Ulu Masen Ecosystem Project, Aceh, Indonesia 32 The Juma Sustainable Development Reserve Red Project, Brazil 35 International and Project-Based Initiatives Underway 37 Chapter 3: REDD Methodology 41 3.1 T  he Voluntary Carbon Standard: Guidance for Agriculture, and Other Land Use Projects 42 3.2 The World Bank Bio-Carbon Fund Red Methodology 43 3.3 The Climate, Community and Biodiversity Standard 44 Chapter 4: Remote Sensing (rs) and REDD 47 4.1 Rs Products Available 48 4.2 Forest Cover, Biomass, and Degradation 50 4.3 Project Methodologies 54 4.4 Operational Recommendations for Rs in REDD Projects 59 4.5 National Forest Monitoring Schemes 60 4.6 Future Priorities for Remote Sensing and REDD 64 Chapter 5: Understanding the Impacts of REDD on the Poor 65 Issue 1: How The REDD Mechanism is Designed 65 Issue 2: Who Owns the Credits 66 Issue 3: Estimating Compensation Under REDD 67 Issue 4: The Benefit Sharing Mechanism 68 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Issue 5: The REDD Measures Introduced 69 Summing up 70 Chapter 6: Country Case Studies 71 6.1 Lao PDR 71 6.2 Nepal 77 6.3 Vietnam 82 Chapter 7: Institutional Stakeholder Mapping 90 90 Organisations WORKING ON REDD IN Lao PDR, VIETNAM AND NEPAL Lao 101 Vietnam 102 Nepal 103 Appendix i: M  ethodology for Estimating Reductions of Ghg Emissions from Mosaic Deforestation 104 Appendix ii: Key Issues in Designing Pro-Poor REDD Agreements 113 References 115 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Tables Table 1-1: Definition of Forestation, Deforestation, and Degradation 13 Table 1-2: Country Submissions on REDD 17 Table 2-1: N  öel Kempff Mercado Project: Contributions and Offsets Assigned 24 Table 4-1: Summary of selected RS sensors 49 Table 4-2: Remote sensing use by selected projects 57 Table 4-3: Vietnam’s four rounds of forest inventory 62 Figures Figure i -1: A Breakdown of Global Greenhouse Gas Emissions Figure 1-1: An Explanation of the Baseline to Calculate Carbon Credits 14 Figure 3-1: The Steps Toward Validation of REDD Projects 45 Figure 3-2: CCB Standards 46 Figure 4-1: Impact of measurement uncertainty on carbon crediting 48 Figure 4-2: Example of NDFI images from Brazilian Amazon 53 Figure 4-3: Map of Noel Kempff Mercado Climate Action Project 55 Figure 5-1: Possible Measures Under a REDD Mechanism 69 Figure 7-1: The Steps for Piloting REDD 91 Maps Map 6-1: Deforestation and Poverty in Lao PDR 72 Map 6-2: Forest Cover Map of Nepal 78 Map 6-3: Land Use and Cover Change in Vietnam 83 Map 6-4: Poverty and Protected Areas in Vietnam 85 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Abbreviations AFOLU Agriculture, Forestry and Other Land Use Projects A/R CDM Afforestation and Reforestation Clean Development Mechanism CDM Clean Development Mechanism Executive Board CCBA Climate, Community and Biodiversity Alliance CER Certified Emission Reduction CoP Conference of Parties DNA Designated National Authority FAO Forestry and Agriculture Organisation FFI Fauna and Flora International FSC Forest Stewardship Council IPCC Intergovernmental Panel on Climate Change IPCC GPG Intergovernmental Panel on Climate Change Good Practice Guidance LULUCF Land Use, Land Use Change and Forestry PES Payment for Environmental / Ecosystems Services RECOFTC Regional Community Forestry Training Center for Asia and the Pacific RED Reduced Emissions from Deforestation REDD Reduced Emissions from Deforestation and forest Degradation R-PIN Readiness Plan Idea Note SNV SNV Netherlands Development Organisation UNFCCC United Nations Framework Convention on Climate Change UNREDD United Nations REDD program VCS Voluntary Carbon Standard VCU Voluntary Carbon Unit VER Voluntary Emission Reduction WBCSD World Business Council for Sustainable Development WB-FCPF World Bank Forest Carbon Partnership Facility WWF World Wide Fund for Nature Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Preface During the Asia Pacific Forestry Week, held in Hanoi in April 2008, much of the attention was focused on climate change and carbon funding The new Reduced Emissions from Deforestation and forest Degradation (REDD) initiative that was launched in Bali during the COP 13 of the UNFCCC, triggers great expectations for new funding mechanisms in the forestry sector Carbon funds could for a first time in history finance services that forests deliver and are normally not integrated in the market system The feeling was that issues such as illegal logging, sustainable forest management and certification can all be dealt with when carbon funding becomes a reality As REDD still has to be developed, there are many concerns about how the system will operate, especially towards the poor and indigenous people who depend on forests To jump start REDD the World Bank launched their Forest Carbon Partnership Facility at the Bali COP, aimed at supporting countries in creating capacity to deal with REDD Countries were invited to write a Readiness Plan Idea Notes to qualify for FCPF support SNV, together with a number of other organisations, supported the Governments of Vietnam and Nepal in drafting these documents Both countries together with Lao PDR qualified for this WB programme At the APFW and during the process of drafting the R-PINs, it became clear that REDD raises many questions To inform all stakeholders on the current understanding on carbon funding and REDD in particular the current study was commissioned to IndoChina Carbon The objective was to an inventory of proposed REDD mechanisms, including the technical methodologies for implementation and ideas for both compliance and voluntary financing systems and give an overview of the involved stakeholders and their activities Special attention is given to pro-poor issues as poverty alleviation is SNV’s core business The study focuses on Asia with special attention to Vietnam, Lao PDR and Nepal, where SNV has forestry programmes Rob Ukkerman, Regional Network Leader Forest Products SNV Asia Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Executive summary Forests play an important role in the regulation of the climate though the sequestration of carbon An estimated 18 percent of annual global emissions are a result of the removal of forests As concerns intensify over global climate change as a result of man- made activities, so too does the debate over the importance of forests as carbon sinks Although afforestation and reforestation is addressed through the Clean Development Mechanism there continues to be a lack of adequate incentives to protect forests for the ecological services they provide to the global climate This may be changing There is renewed interest in the notion of ‘compensated reductions’ where individuals, groups and/or governments are compensated for not cutting down forests This is a highly cost effective way to reduce emissions of Carbon Dioxide into the atmosphere Although this issue of reduced emissions from deforestation and forest degradation (REDD) has been hotly debated in the past and ultimately rejected, it would appear that there is growing support and momentum to bring about an international agreement on REDD How that will be designed is unclear and this report goes some way in understanding the likely design of any future agreement However, even if an international agreement is not reached there are already REDD projects appearing across the globe and ever more sophisticated techniques and methodologies are being developed to monitor and measure REDD credits Some of the latest methodological developments are outlined in this report As well as concerns over whether there exist adequate technologies and methods to estimate carbon emissions avoided from reduced deforestation and degradation, there has also been concerns over the impact of such schemes on the poorest –in particular how such schemes could harm the livelihoods of the many forest dwelling communities who not have security of tenure Such concerns must be properly addressed for any REDD mechanism to survive The relationship of REDD and the poor is explicitly examined As the interest and possible opportunities from REDD grows, so to does the desire for different groups to fully understand how it works and how they should engage This report, commissioned by SNV, helps the reader navigate the rapidly developing world of REDD It is also designed to be used as guide and to provide recommendations on how to move the REDD debate forward in a number of countries Of particular interest to SNV are Lao PDR, Nepal and Vietnam Each of these countries is receiving support from ongoing international initiatives to become ‘REDD ready’ and are therefore important countries to learn lessons from REDD in the run up to Copenhagen At this meeting there will be decisions on a future REDD agreement Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Introduction Approximately 35 per cent of greenhouse gases in the atmosphere are a result of past deforestation and 18 percent of annual global emissions are from continued deforestation1 As shown in Figure deforestation is the second single greenhouse gas source, behind energy production How forests are managed has a profound impact on the global climate Figure i-1: A breakdown of global GHG emissions In the lead up to the Kyoto Protocol there were expectations that significant finances could be mobilized to arrest deforestation and the associated carbon emissions However, in Marakkesh it was decided that only reforestation and afforestation could be accepted land uses under the Kyoto Protocol However, in ten years on the forests of the world will continue to be deforested and degraded at an alarming rate and there are very few afforestation/reforestation projects producing registered carbon emission reduction credits This has led to renewed calls for the inclusion of reduced emissions from deforestation and forest degradation (REDD) as part of an international agreement to combat climate change The Conference of Parties (COP) 13 in Bali in December 2007 elevated this issue center stage and produced a road map to integrate REDD REDD has sparked considerable interest from a broad range of groups: governments, multilateral development banks, investment banks, research groups and non government organisations Such groups recognize the possibility of harnessing considerable financial streams from international carbon markets for forest protection and poverty alleviation Although, it remains unclear how REDD could be integrated into a future climate change framework, REDD projects are already developing around the world The first chapter of this desk study examines the possible design of a future international REDD mechanism, highlighting and discussing some of the key design issues which will need to be examined and addressed within any future international REDD mechanism A  ustralian National University (2008), “Green Carbon, the role of natural forests in carbon storage”, Canberra 10 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Although no international REDD mechanism has been agreed, a number of REDD initiatives are already underway or being prepared Following COP 13 in Bali the World Bank established a Forest Carbon Partnership Facility (FCPF) to pilot REDD in a number of selected countries; the Norwegian Climate and Forest Initiative was established with similar aims The lessons from these pilots will inform discussions in Copenhagen in 2009 Chapter two provides information and lessons learnt from the pioneer REDD projects around the world and describes some REDD initiatives in the pipeline In Chapter three information on the different methodologies, which currently exist or which are being developed in order to gain carbon credits from REDD are described For an organisation such as SNV, improving forest management as way to enhance the lives of the poorest and to protect the environment are core to its mission SNV recognizes that there could be great opportunities from REDD, to provide additional income from forest protection and hence arrest forest conversion However, this will only happen so long as the schemes are designed in a way where those depending on the forests have sufficient incentives to protect them Chapter four of this desk study examines the critical issue of REDD and poverty and distills some of the key considerations which must be taken on board to ensure REDD works for and not against the poor Such considerations can be taken forward in future designs of REDD schemes Learning from the first four chapters, chapter five of this desk study looks at the current situation of the forestry sector in a number of SNV Asia priority countries and explores their ability to introduce REDD schemes Summarising SNV activities in each country helps to build a foundation to provide recommendations A profile and recommendations on REDD engagement are provided for Lao PDR, Nepal and Vietnam This information should provide a platform for SNV to move forward on REDD in those countries Finally, in order to properly engage in the REDD debate it is necessary to see which other groups are working in this realm There are also a myriad of others groups interested or engaged in the REDD discussions Chapter six maps out the key players in the REDD debate and for each group a summary of their interests and activities are provided 106 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Once complete, then using the appropriate data sets already collected it is possible to divide up the reference area, project area and leakage belt into relevant polygons which represent the different LU/LC classes and LU/LC change categories It is urged to try to use already approved or validated studies Technical experts may be required to carry out the analysis of the LU/LC change which should include pre processing, interpretation and classification and post processing In post processing GIS may be used to help break down the different classes into sub classes based on carbon densities As a result of this analysis a number of maps will need to be produced: a forest cover benchmark map (showing only forest and non forest) for each time period; a land use and land cover map for each time period; a land use and land cover change map for each sub period; and a land use and land change matrix showing the changes identified in the maps This matrix will be used to project historical trends into the future Once this information is derived then the accuracy of the maps need to be assessed using the high resolution information and/or field visits collected in task This will help derive an error matrix Various suggestions in terms of benchmark figures are provided on when the level of error is too high; as well as some suggestions to overcome them The final task under step is to pull all this information together As the area has to be assessed over a period of time to understand trends and estimate carbon reductions it is imperative that the same methods are used throughout All the information and techniques used needs to be clearly documented and provided as an Annex to the project development document (PDD) Step in summary Collection of appropriate data sources (medium resolution and high resolution samples) Definition of classes of land use and land cover Definition of categories of land use and land cover change Mapping of historical land use and land cover change (includes pre-processing, interpretation and classification and post processing) Map accuracy assessment Prepare methodology for PDD Step 3: Analysis of agents, drivers and underlying causes of deforestation In this next step the issue of who is causing deforestation ‘the agents’ are assessed and what is driving them to this: ‘drivers’ and ‘underlying causes’ examined The reason for carrying out this analysis is in order to help identify likely future areas of deforestation and also to help in finding ways to address them Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 107 The first task is to find out which groups are involved (e.g local communities, ranchers, etc) and their relative importance in terms of deforestation This information can be obtained through site visits, using secondary studies carried out in the area, conversation with relevant experts etc Also, the information derived from step will be insightful as it will show land use changes and clearly indicate the likely culprits For each of the recommended groups a list of information needs to be provided, including likely development of the population size Next the immediate deforestation drivers associated with each group need to be identified and examined These are divided into driver variables explaining the quantity of deforestation (e.g prices changes, costs of inputs) and driver variables explaining the location of deforestation (e.g access to forest, proximity to market, slope etc) For each driver the top five key driver variables need to be identified and further explained in terms of how they drive deforestation now as well as likely trends Project measures to counter such drivers also need to be described Once complete a look at the underlying or root causes of deforestation is needed These are the larger factors which lead to the more proximate drivers These could include population pressures, property regimes, war and so on As with the immediate drivers the most important underlying causes should be further examined in terms of how they cause deforestation, their links to the more immediate drivers and there likely impacts on future deforestation Again project measures to address them should be described Finally pulling together all this information a causal analysis which links the different agents, key drivers and underlying causes together and how they affect deforestation should be produced A summary of this should be provided for the PDD Also a concluding statement is needed which outlines the most likely evolution of deforestation in the reference region, project area and leakage belt Summary of step Identify agents of deforestation (and their relative importance) Identify deforestation drivers (quantity and location) Identify underlying causes of deforestation Analysis of chain of events leading to deforestation Step 4: Projection of future deforestation This next step predicts future deforestation Once complete this step should provide sufficient information to locate baseline deforestation in space and time which occurs within the reference area, the project area and the leakage belt Advice is given to use existing projections if they are already available and meet certain criteria As part of this step there are a number of tasks which need to be completed First of all the quantity of future deforestation needs to be projected for each future year within the monitoring period This will be determined by projecting future changes caused by the agents of change, the drivers and underlying causes of deforestation It must also take into account the quantity of remaining forest areas which can be converted 108 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam To this a baseline approach must be selected: using either a linear projection or a modeling approach The former projects future trends based on past trends observed in the reference region This can continue up to the point that further expansion of deforestation becomes constrained (see next task) The modeling approach is more sophisticated, taking a range of variables causing deforestation which can be updated at subsequent monitoring periods Advice is provided when one approach is more suitable than the other In projecting future trends it is necessary to analyse constraints to the further expansion of deforestation, in particular land use constraints In cases it is clear that land availability may eventually start to constrain conversion, the reference area should be divided into suitability classes - optimal, sub optimal and marginal - for the different land uses implemented by the main agent groups As deforestation moves from optimal to marginal it will slow the pace of deforestation to the point it will cease altogether Under this task a maximum potential deforestation map will be produced Once completed a quantitative projection of future deforestation can be carried out This should determine the average annual deforestation rate (in % of remaining forest land) for different strata for the reference region, project area and leakage belt, taking into account the land use constraints identified above As stated above the modeling approach brings greater sophistication but is more demanding in terms of information and technical expertise than a linear projection In order to add greater detail to this step it is then necessary to project the actual locations of future deforestation Several models have been developed, one of which is used as the basis for this task This uses the information from step on spatial driver variables (e.g distance from road, proximity to market) These can be represented on a map or driver image which is overlaid with a map showing historical deforestation using GIS From this, risk maps for deforestation can be produced and the most accurate maps are selected All of this information will furnish a final map showing locations of future deforestation Summary of step Selection of baseline approach Analysis of constraints to further deforestation Quantitative projection of future deforestation Projection of location of future deforestation Step 5: Definition of the land use and land use cover change component of the baseline This step is necessary because the various land use/land use change categories will have different levels of emissions Clearly if the land changes from primary forests to grassland, this will have a considerable higher emission content than from secondary forest to agroforestry This step must be carried out to understand the likely forest classes which would be deforested and to estimate what is likely to replace them in the without project scenario From this information the emission factors can be estimated Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 109 Two methods to carry out this step are suggested Method one can be used when the same carbon pools are estimated in all LU/LC classes A further sub step is needed for method two which should be used when different carbon pools are estimated on the LU/ LC change categories considered The first task under this step is to identify the different forest classes that would be deforested under the baseline scenario Using the maps of baseline deforestation and maps from step on land use and land cover a new set of maps can be derived showing how different forest classes are deforested each year in the absence of RED activities This information also needs to be put into a table providing a summary showing the different forest classes and how they would be deforested under the baseline case Once this information is procured the next task is to identify what land use and land cover changes will replace the forest areas This implies that some sort of likely prediction on what deforestation agents will on this land A suite of options in order to make this prediction is provided: (ι) A simple conservative approach where a conservative average of carbon density is estimated representative of all post deforestation carbon densities; (ιι) Historical LU/LC change where past LU/LC trends are assumed to represent future trends in the same proportion; (ιιι) Suitability ranking: where more assessment is carried out to predict likely future land uses post deforestation This is particularly important where there is likely to be a scarcity of land so past trends may not be so accurate in predicting the future A further task is required if method is followed From the maps derived above a new set of maps showing polygons of the categories of LU/LC change for future years are produced From this further information can be derived and tabulated which can be used in future steps to estimate carbon levels Summary for step Identification of forest classes that would be deforested under the baseline Identification of non forest classes on deforested land Identification of land use and land cover change categories Step 6: Estimation of the baseline carbon stock changes and non CO2 emissions from forest fires In this step the baseline assessment can be finalized by building on the information above to calculate carbon stock changes In this step the baseline changes in the non CO2 emissions can also be calculated if they are to be included in the overall assessment Prior to estimating the baseline carbon stock changes it is necessary to estimate the carbon stocks of different LU/LC classes, listed previously This information can be collected for existing data sources or where this information is not available it may be collected Various 110 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam guidance documents are recommended on how to carry out the samples If it cannot be collected locally a final option is to use conservative estimates from surveys carried out in other countries – for example IPCC default values In such cases a conservative approach must be used With this information at hand carbon stock changes can be calculated according to whether method one or method two in the above step has been followed In both cases the numbers are taken from the tables produced from step five and are multiplied by their average carbon density The sum of the products is calculated for each future year or monitoring period and are reported in a table This provides the basic information on likely carbon stock changes without any project intervention If it is deemed necessary to also estimate non CO2 emissions for the baseline, advice is provided on how to this from the effect of forest fires Conversion of forests to other land area as a result of forest fires produces non CO2 emissions If forest fires are a noticeable aspect in the historical reference period then they may need to be considered as part of the baseline The effect of fires on CO2 is not considered as this would lead to double counting Average figures from past on forest fires are used to determine likely future occurrences A number of steps are provided to calculate these values Summary of step Estimation of baseline carbon stocks Estimation of non CO2 emissions from forest fires Step 7: Estimation of actual carbon stock change and non CO2 emissions In this step the carbon changes under the project scenario are estimated Although these will be monitored and verified throughout the project life they need to be estimated at the beginning to help decide on what RED measures to introduce and to calculate the possible carbon emission reductions If non CO2 emissions from forest fires where included in the baseline then they need to be included here In order to carry out this step the first task is to estimate actual carbon changes This involves three tasks: (i) Firstly, an estimation of the quantity and location of actual deforestation However, in most cases this will not be necessary as there is expected to be no deforestation; (ii) Adjust the mosaic of forest polygons and classes to adjust to the new project scenario due to the introduction of RED measures In cases where carbon stocks may actually decrease under the project scenario (e.g harvesting of timber) then necessary adjustment must be made as recommended Similarly adjustments can be included for carbon stock enhancement In each case standard format tables should be produced to capturing the information; (iii) The final task is to calculate actual carbon changes which can be done by distilling the information gathered in task (ii) Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 111 In cases where non CO2 emissions from forest fires are included in the baseline then they should also be included in the project scenario Step provides the guidance and necessary information to estimate these emissions Summary of step Estimation of the quantity and location of actual deforestation Adjustment of the mosaic of forest polygons and classes Summary of ex ante estimation of actual carbon stock changes Estimation of actual non CO2 emissions from forest fires Step 8: Estimation of decrease in carbon stock and increase in GHG emissions due to leakage In this step the issue of leakage is addressed by trying to estimate the likely impacts of the project scenario on the defined leakage area Again it is necessary to this ex ante in order to help in designing and introducing measures to combat leakage, to identify possible areas where significant leakage will occur and to help in making projections on revenues to be made from carbon emission reductions Two sources of leakage are considered: 1) Displacement of baseline activities from project area to baseline area 2) GHG emissions resulting from leakage prevention measures As a result of the project activities this may cause agents to simply move their activities to other areas and engage in the same destructive practices It is therefore critical to monitor this If the carbon stocks in the identified leakage belt decreases more than expected this is a clear indication of leakage due to displacement of baseline activities In order to estimate the possible impacts of activity displacement on carbon stocks outside the project boundary the following sources of leakage must be estimated and where potentially significant, monitored: (i) Displacement of grazing; for this use the CDM EB approved ‘tool for the estimation of GHG emissions related to the displacement of grazing activities in A/R CDM project activities’; (ii) Displacement of agricultural activities; for this use the CDM EB approved methodology for ‘reforestation or afforestation of land currently under agricultural use (AR – AM0004, section on estimation of leakage due to conversion of land to crop land, based on area of conversion)’; (iii) Increased use of non-renewable biomass; for this use CDM-EB approved tool for the calculation of GHG emissions due to leakage from increased use of nonrenewable woody biomass attributable to an A/R CDM project activity 112 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam If leakage prevention measures are introduced, which includes activities such as agricultural intensification then the GHG emissions associated with these activities need to be estimated ex ante and if significant monitored The main GHG emissions from leakage prevention measures which are flagged up and which may need to be captured include: (i) Nitrous oxide from nitrogen fertilizer which can be estimated using the CDMEB approved tool ‘estimation of direct nitrous oxide emissions from nitrogen fertiliser’ for A/R CDM project activities; (ii) Methane and nitrous oxide from livestock intensification Here various methods are proposed to estimate this; (iii) Consumption of fossil fuels where the latest CDM-EB approved tool for ‘estimation of GHG emissions related to fossil fuels combustion in A/R CDM project activities’ The information for each of the three possible sources then needs to be tabulated and aggregated Finally for those carbon stocks which are deemed significant they should be summed together to produce total decreases in carbon stocks due to activity displacement These should be put into a table This information provides an ex ante estimate of leakage due to activity displacement and allows the estimation of total leakage In order to monitor ex post activity displacement it is necessary to monitor against the baseline for the leakage belt This baseline needs to be derived in the same way the baseline was determined for the project area discussed in steps to Summary of step Estimation of increases in GHG emissions due to leakage prevention measures Estimation of decreases in carbon stocks due to displacement of baseline activities Estimation of total leakage Step 9: Ex-ante net anthropogenic GHG emission reductions In order to estimate the net GHG emission reduction of a RED project activity, the following equation is used: Carbon RED = Carbon BASELINE – Carbon ACTUAL – Carbon LEAKAGE In the absence of regulatory guidance on how to quantify carbon credits based on carbon stock changes and GHG emission reductions in RED project activities no specific methods are provided Project proponents are encouraged to explore possible approaches Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 113 Appendix II: Key Issues in designing pro-poor REDD agreements Provision of information is required at national and local levels to ensure equitable negotiation of REDD agreements Information should at a minimum contain basic details of how REDD mechanisms work, realistic expectations of benefits and possible implications Provision of upfront finance and other mechanisms for reducing costs to help improve the equity of benefit distribution in REDD This may help bridge the gap between project/programme initiation and payments for the delivery of emission reductions Use of ‘soft’ enforcement and risk reduction measures: ‘Hard’ enforcement measures such as financial penalties are likely to affect the poor disproportionately Project investors and/or developing country governments should apply ‘soft’ measures such as non-binding emission reduction commitments where possible Prioritise ‘pro-poor’ REDD policies and measures: Whilst different REDD options may give rise to similar levels of emissions reductions, impacts on the poor will be varied To ensure social benefits, a strong ‘pro-poor’ political commitment is required from the outset Provide technical assistance to national and local governments, NGOs and the private sector: technical assistance will be needed to increase investment and the visibility of the poor Key areas include: establishing reference scenarios/ levels for measuring performance; improved data collection on small-scale enterprise and subsistence values; financial systems and verification services for REDD; and landscape planning approaches Support to strengthen local institutions and improve access to legality: To ensure ‘voice and choice’ in REDD design and implementation, improved access to appropriate legal support will be crucial for poor people This is especially the case with REDD, where new and unfamiliar legal structures may be required, and where approaches may be experimental Maintain flexibility in the design of REDD mechanisms: Flexibility, for example, including the use of nationally specific standards or regular review processes, will be crucial to minimise risks such as communities being locked into damaging long-term commitments Clear definition and equitable allocation of carbon rights: rights to own and transfer carbon will be essential for REDD emissions trading As these will govern land management over long timescales, consultation will be needed in their formulation Where national governments retain carbon rights, equitable benefit sharing agreements will be needed Development of social standards for REDD and application of existing extra-sectoral standards to REDD systems could improve benefits for the poor by ensuring that processes such as public consultation are thoroughly carried out Standards should also be developed for ongoing social impact assessment at project and national scales 10 Balance rigour and simplicity: Mandating complex standards can have perverse effects in market systems, such as reduced access to markets by small 114 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam producers REDD-related standards need to be simple and accessible but also robust 11 Ensure broad participation in the design and implementation of REDD, for example, through improving access to international debates by developing countries and NGOs It will be important to consider the most appropriate level at which to assign decision making powers over REDD to achieve maximum participation of the poor 12 Measures to improve the equity of benefit distribution: Issues such as risk aversion and cost-effectiveness are likely to lead to highly variable benefit distribution Use of tools such as taxes to redistribute benefits and strengthening of local institutions may improve equity 13 Avoid perverse effects of REDD due to limited direct benefits: Incentive schemes where benefits are concentrated can create perverse effects such as inmigration and conflict Benefits will therefore need to be distributed across wide areas and actors, and combined with strong accountability measures to ensure that beneficiaries are legitimate 14 Ensure accountability and transparency in REDD processes, for example through third party verification and strengthened democratic processes This could help reduce perverse effects such as corruption that can adversely affect the poor 15 Alignment with international and national financial and development strategies, such as Poverty Reduction Strategies This could help to raise the profile of the poor within REDD and improve sustainability by integrating REDD into wider processes 16 Ensure longevity in REDD mechanisms: Stable and predictable benefits associated with REDD could provide increased security to the poor At community and individual levels, benefits need to be distributed over the lifetime of REDD projects and assumptions about the sustainability of alternative livelihood approaches should be critically evaluated 17 Use of broad definitions for land use types that can be included in REDD systems could help increase overall coverage of REDD, thereby increasing income and growth potential, and could facilitate inclusion of potentially propoor activities such as agroforestry Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 115 References Alvarado, L, X,R and Wertz-Kanounnikoff, S (2007), ‘Why are we seeing REDD? An analysis of the international debate on reducing emissions from deforestation and degradation in developing countries Balch, O Forests: A carbon trader’s gold mine? ClimateChangeCorp online news May, 2008 Bali Declaration: Protecting the World’s Forests Needs More Than Just Money, 10 December 2007 Bird, N, N Kaur L Peskett and G Porter, (2008), New Finance for Climate Change and the Environment WWF and Heinrich Böll Foundation Jul 2008, p 23, 27, 29, 34, & 42 Bowan-Jones, J, E Brown, G Edwards, D Huberman, and L Peskett, (2008), Making REDD work for the poor Draft on behalf of the poverty and environment partnership, ODI, London Bowan-Jones, E Reducing Carbon Emissions from Deforestation in the Ulu Masen Ecosystem, Aceh, Indonesia FFI presentation Boyd, E, M Chang, P May, and F Veiga Description and analysis of the Noel Kempff Mercado Climate Action project In “Local sustainable development effects of forest carbon projects in Brazil and Bolivia: A view from the field.” IIED Environmental Economics Program Jan 2004, pp 71-89 Boyle, Tim, UN-REDD Consultant Personal Communication Oct 2008 Butler, R “Carbon traders, not conservationists, could save Cameroon rainforest.” Mongabay Online Journal Feb 15 2008 http://news.mongabay.com/2008/0215cameroon.html Butler, R First rainforest-for-carbon-credits deal becomes a reality Mongabay online journal Feb 2008 http://news.mongabay.com/2008/0207-carbon_ conservation.html Canberra (2008), Australian National University “Green Carbon, the role of natural forests in carbon storage” CATIE (2007) The “Nested Approach”: A flexible mechanism to reduce emissions from deforestation Available from http://www-personal.umich.edu/~thoumi/ Re s e a r c h / C a r b o n / Fo r e s t s / Fo r e s t s , % A D % C r i t i q u e s / N e s t e d % Approach%20to%20REDD.pdf CBFORM–Capacity Building for Forestry Presentation at Seminar on Capitalizing Forestry and Climate Change in Malaysia 11 Aug 2008 COMIFAC (2004), Plan de convergence pour la conservation et la gestion durable des ecosystems forestiers d’Afrique Centrale, Yaounde: 55 http://www.comifac.org/ comifac/ plandeconvergence1.pdf Congo Basin Forest Partnership (2004), A Partners for Sustainable Development website Apr 2004.`http://webapps01.un.org/dsd/partnerships/public/partnerships/14.html 116 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Dutschke, M and Wolf, R (2007), Reducing emissions from deforestation in developing countries: the way forward, GTZ, Eschborn Ebeling, J., T Neeff, S Henders, C Moore, F Ascui, L Peskett, J Fehse, A Sari, D Wolfowitz, D., and Z Harkin (2008) REDD policy scenarios and carbon markets Report prepared for the Indonesian Forest Carbon Alliance (IFCA) Ecosecurities: Oxford, UK 136 pages The Economist The unkindest cut Feb 14 2008 http://www.economist.com/opinion/ displaystory.cfm?story_id=10688618 FFI Aceh Forest & Environment Project Annual Progress Report 2007 FFI & Carbon Conservation Reducing Carbon Emissions from Deforestation in the Ulu Masen Ecosystem, Aceh, Indonesia A project design note for CCBA Audit Dec 2007 First Countries Named to Benefit from Forest Carbon Partnership Facility Forest Carbon Partnership Facility: Readiness Plan Idea Note (R-PIN) for Lao PDR (see http://carbonfinance.org/Router.cfm?Page=FCPF&FID=34267&ItemID=34267& ft=DocLib&ht= 42503& dl=1 FAO - UNDP - UNEP Forest Degradation to support developing countries Presentation Jun 2008 http://unfccc.int/files/methods_and_science/lulucf/application/pdf/ 080627_fao01 _japan.pdf Gallagher, L, D Huberman, I Mulder, and A Peterson, “Seeing REDD: The Opportunity for a Climate-Conservation Double Dividend Through Avoiding Deforestation A UNEP/IUCN presentation www.unep.ch/etb/events/pdf/Presentation1_ WRGI2%20event.ppt Gardner, T “U.N launches program to cut deforestation emissions” Reuters online http://www.reuters.com/article/environmentNews/idUSTRE48N91C20080924 Gibbs, Brown, and Niles 2007 Monitoring and estimating tropical forest carbon stocks: making REDD a reality Environmental Research Letters DOI:10.1088/17489326/2/4/045023 GOFC-GOLD (2008), Reducing greenhouse gas emissions from deforestation and degradation in developing countries: a sourcebook of methods and procedures for monitoring, measuring and reporting, GOFC-GOLD report version COP 13-2, (GOFC-GOLD Project Office, Natural Resources Canada, Alberta, Canada) Government of Lao PDR (2005), The Forest Strategy 2020, The Government of Lao PDR, Vientiane Haeusler and Gomez 2008 REDD Pilot Project COMIFAC: Cameroon Presentation to REDD-COMIFAC meeting, Paris, March 2008 Available at www.cbfp.org/docs/ REDD-paris032008/12%20-%20Haeusler%20REDD%20Pilot%20Cameroon pdf International Forest Carbon Initiative Government of Australia Department of Climate Change http://www.climatechange.gov.au/international/publications/ fs-ifci.html ITTO Workshop on methodological issues related to REDD - Tokyo, 25-27 June 2008 Japan-Asia REDD Seminar http://www.iges.or.jp/en/fc/ activity_20080324reed.html IPCC 2006 Guidelines for national greenhouse gas inventories Volume 4: Agriculture, forestry and other land use Available at http://www.ipcc-nggip.iges.or.jp/ public/2006gl/vol4.html Understanding REDD: Implications for Lao PDR, Nepal and Vietnam 117 The Juma Sustainable Development Reserve Project: Reducing Greenhouse Gas Emissions from Deforestation in the State of Amazonas, Brazil A project design document (PDD) for the Climate, Community & Biodiversity Alliance (CCBA) Standard May 2008 Kathmandu, Department of Forestry (2006), Management Information System, Department of Forestry Kollmuss, A, C Polycarp, and H Zink (2008), Making sense of the voluntary carbon market: a comparison of carbon offset standards, WWF Germany Kempff, Noel.ClimateActionProjects/NoelKempff/NKPDD,http://conserveonline.org/ workspaces/climate.change/ Kempff, Noel (2008), Combating Climate Change in Bolivia The Nature Conservancy http://www.nature.org/initiatives/climatechange/work/art4253.html Leape, J Forest harmony Letter to the editor Economist Mar 2008 Lambin, E.F and Meyfroidt, P (2008), Forest transition in Vietnam and its Environmental Impacts, Global Change Biology 14, 1–18.Marriott and Brazilian State of Amazonas Partner to Protect Rainforest A Marriott press release dated Apr 2008 http:// www.marriott.com/news/detail.mi?marrArticle=312511 McWilliam, R Reducing deforestation: Lao PDR and carbon trading WWF website 08 Jun 2008 http://www.panda.org/about_wwf/where_we_work/asia_pacific/ where/Lao PDR/index.cfm?uNewsID=136381 Miller Llana, Sara (2008) “Bolivia gets clean by staying green: Project pays Bolivia for The forests it does not cut - a potential model in the battle against climate change.” Christian Science Monitor June 5, 2008 editionhttp://features.csmonitor.com/ environment/ 2008/06/05/bolivia-gets-clean-by-staying-green/ Neeff, T Eichler, L Deecke, I and Fehse F (2007), Update on markets for forestry offsets, CATIE, 2007 Nepal R-PIN World Bank Forest Carbon Partnership Fund www.carbonfinance.org New Forests Signs Agreement to Establish REDD Project in Papua, Indonesia A New Forest press release May 2008 http://www.newforests-us.com/index.html Niles, J It’s Not Easy Being Green in Aceh, Indonesia An opinion published by The Katoomba Group’s Ecosystem Marketplace online journal Oct 25 2007 http://ecosystemmarketplace.com/pages/article.opinion.php?component_ id=5358&component_version_id=7777&language_id=12 P May, E Boyd, F Veiga, and M Chang (2004) Description and analysis of the Noel Kempff Mercado Climate Action project In “Local sustainable development effects of forest carbon projects in Brazil and Bolivia: A view from the field.” IIED Environmental Economics Program Jan 2004, pp 71-89 Peskett (2008), Making REDD work for the poor (draft for the poverty and environment partnership, ODI, London Pedroni, Lucio The “Nested Approach” A flexible Mechanism to reduce emissions from deforestation for the International Roundtable on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries Brussels (Belgium), 24-25 October, 2007 118 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Peskett, (2006) How Did Forest Fare In Nairobi? ODI Blog Friday, 15 December 2006 Santelli, M and Moutinho, P et al, (2005), ‘Tropical deforestation and the Kyoto Protocol, Climate Change 71(3): 267-276 Seifert-Granzin, J (2007) The Noel Kempff Climate Action Project: Challenges for project based approaches in future REDD schemes An FAN Bolivia presentation at Conservation Finance Workshop Vilm, 29 Jul – Aug, 2007 www.bfn de/fileadmin/MDB/ documents/ina/vortraege/22_FAN_Noel_Kempff-SeifertGrenzin.pdf SGS (2005) The Noel Kempff Climate Action Project.: Validation and Verification Report Summary Nov 2005 www.fanbo.org/serviciosambientales/proyectos/ REDD/ SummaryFinalVerificationReportNKCAP27Nov.pdf SmartWood/Rainforest Alliance Validation Audit Report for Climate, Community and Biodiversity Project Design Standards for Ulu Masen Ecosystem, Aceh Indonesia Jan 17 2008 SNV (2008), Sustainable Poverty Reduction: SNV Asia regional results and strategies 2007-2010, SNV UNFCCC 14 Mar 2007 Souza, Roberts, and Cochrane 2005 Combining spectral and spatial information to map canopy damage from selective logging and forest fires Remote Sensing of Environment 98: 329-343; GOFC-GOLD 2008 Voluntary Carbon Market Tripled in 2007 Carbon Finance Print version May 2008 Vol 5, Issue 5, Pg Voluntary Carbon Standard (2007): Guidance for Agriculture, Forestry and Other Land Use Projects http://www.v-c-s.org/docs/AFOLU%20Guidance%20Document.pdf World Bank Pilot Program to Conserve the Brazilian Rain Forest (PPG7) News updated Dec 2005 http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK: 20757004~pagePK:64257043~piPK:437376~theSitePK:4607,00.html.World Bank (2005) Vietnam Environmental Monitor – Biodiversity, World Bank, http:// web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21846447~men uPK:34463~pagePK:34370~piPK:34424~theSitePK:4607,00.html SNV is dedicated to a society where all people enjoy the freedom to pursue their own sustainable development We contribute to this by strengthening the capacity of local organisations SNV Bhutan Office P.O Box 815 Langjophaka, Thimphu, Bhutan Tel: +975 322900/322732 Fax: +975 322649 Email: bhutan@snvworld.org SNV Lao PDR Office P.O Box: 9781 Nongbone Road, Vientiane Lao PDR Tel: +856 21 413290/291 Fax: +856 21 414068 Email: laos@snvworld.org SNV Cambodia Office House # 21A, Street 302 Sangkat Boeung Keng Kang I Khan Chamcar Mon Phnom Penh City Cambodia Tel: +855(0)23726424 Email: cambodia@snvworld.org SNV Nepal Office Bakhundole, Lalitpur P.O.Box: 1966, Kathmandu, Nepal Tel: +977 5523444 Fax: +977 5523155 Sat Ph +88 216 877 00286 Email: nepal@snvworld.org SNV Vietnam Office 6th Floor, Building B, La Thanh Hotel 218 Doi can, Ba dinh, Hanoi, Vietnam Tel: +84 38 463791 Fax: +84 38 463794 Email: vietnam@snvworld.org Regional Office SNV Asia 6th Floor, Building B, La Thanh Hotel 218 Doi Can, Ba Dinh District, Hanoi Vietnam Tel: +84 38 8463791 Fax: +84 38 8463794 Email: asia@snvworld.org Visit our website: www.snvworld.org ... Change in Vietnam 83 Map 6-4: Poverty and Protected Areas in Vietnam 85 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Abbreviations AFOLU Agriculture, Forestry and Other Land Use... attention to Vietnam, Lao PDR and Nepal, where SNV has forestry programmes Rob Ukkerman, Regional Network Leader Forest Products SNV Asia Understanding REDD: Implications for Lao PDR, Nepal and Vietnam. .. Designing Pro-Poor REDD Agreements 113 References 115 Understanding REDD: Implications for Lao PDR, Nepal and Vietnam Tables Table 1-1: Definition of Forestation, Deforestation, and Degradation